GST Gst applied to Works Contract

Discussion in 'GST (Goods & Service Tax)' started by Purva Jain, Aug 21, 2017.

  1. Purva Jain

    Purva Jain New Member

    Each item in civil work for construction involves cement, sand, steel etc. has different GST rates. The work is proposed to be executed under Works Contract mode by inviting public tender.

    What is the methodology for applying GST to the estimated cost? Should GST be considered for individual items, as each item consists of material and labour, or should GST be added to the total amount for arriving at the total amount put to tender?
  2. Raju Choudhary

    Raju Choudhary Active Member Staff Member

    For input cost to the contractor....... each item at specified rate
    For output works contract....... total contract amount + GST at (18%/12% GST)...... [less the ITC over input.]
  3. Purva Jain

    Purva Jain New Member

    Thanks for the reply
    Consider PWD which awards tenders for carrying out their construction works. Design and estimation is done by the PWD itself in an item-wise mode.

    Does PWD have to add GST on each item, and afterwards 18% on the total cost and then put that amount to tender? If GST is included on individual items and then on the total, then doesn’t it tantamount to “tax on tax” phenomenon.
  4. Raju Choudhary

    Raju Choudhary Active Member Staff Member

    In GST there is no chance left for 'tax on tax'...........
    Why PWD add gst over each item? GST for PWD or the contractor is just estimate while filling tender form (to arrive at some cost).
    GST is charged only on final bill amount, after completion of work, on actual value (no estimate here).
    From this output GST....... contractor is eligible to deduct (not add) the GST paid on the individual items ( known as ITC).

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